Going Digital in the Boardroom – Is UK Plc running out of time?

It really will come as no surprise to regular readers of this blog if I draw attention to the key finding from Capgemini and MIT’s recent research into the impact of digital technologies on businesses across the globe* – namely that the new digital capabilities are creating the conditions to drive a third industrial revolution (a real digital transformation).  Despite this research and the welter of anecdotal stories confirming the devastatingly transformational power of emerging digital capabilities across UK industries a recent survey by Russell Reynolds Associates (reported in the Telegraph**) revealed that there are still a massive 308 of the FTSE 100 and FTSE 250 companies in Britain who currently have no “digital” board members at all.   That means a big percentage of our UK big businesses do not have at least one Board member who claims to be “up to speed” on digital technology.  Given the scope and pace of change this seems like a significant handicap for UK PLC.  

So what I want to think about in the blog is this:  Is this finding

a) A statistical non fact*** that can be deemed irrelevant as it doesn’t affect the current and/or future health and well being of UK plc or 

b) Are we seeing a classic Canute-like, digital obfustication from the Boardrooms of a country that struggles to establish high speed broadband links, deliver comprehensive mobile coverage (even in London) and is steadily slipping behind many other countries in the depth and breadth of the available commercial and public applications of digital? 

Now I know it sounds as if I might be slightly biased but let’s pretend I’m not and analyse the issue a bit at a time.  First let’s ponder a) whether or not this is indeed a non-issue bought to life through the use of yet another non-fact.  Let’s explore whether or not this is much ado about nothing.   So what if UK Boards do not have board members who understand digital technology, as long as the Board members understand finance and business process does it really matter?  Well, what is very clear from the Capgemini/MIT research is that Digital Leadership is a key component for those businesses who wish to benefit from the 26% profit advantage available to the Digirati**** and it would seem to be pretty difficult to provide the vision and strategy necessary to become a Digirati without senior commitment in the Boardroom.   Therefore, I think we can rapidly conclude that not having capable digital leadership in the Boardroom is akin to shooting yourself in the foot when running the global “digitally competitive” race.   We desperately need digital leaders in the UK Boardroom's and we need them there now.

Having put to bed the “non-fact” argument (albeit rather rapidly) let’s review b) the idea that this is just a classic case of the Boardrooms of UK Plc being change resistant.  Now what is interesting and slightly worrying here is that, according to Russell Reynolds, whilst the rate of digital non executive board appointments is on the rise (hurrah), with around 4 per cent of 2012 newly appointed directors in the FTSE 100 and FTSE 250 having digital backgrounds, the UK is still lagging far behind the United States (oops), where 15 per cent of newly appointed Fortune 100 directors in 2012 had digital backgrounds.  If we also include the anecdotal “digital” stories from the Nordics and the Asian world we can be persuaded to conclude that in the UK we are moving more slowly than some of our closest competitors.  In addition UK Boardrooms have “form” when it comes to integrating new elements into their homogeneous ranks.  As has been much discussed and debated, many UK Boardrooms are still a long way away from having a representative number of female members too.   So it wouldn’t be too much of a stretch to say that the lack of “digitally savvy” Board members is merely another example of the maintenance of the status quo in the UK’s white, male, finance orientated Boardrooms – ouch.  Maybe we could call the condition digiphobia.

Ok, so looking at the above I think it’s fair to say UK Plc has a bit of a problem.  If we want to be competitive in the global marketplace we have to get our act together, overcome our digiphobia and enhance and broaden our digital leadership capabilities at speed.   In the UK we really need to get our heads around the benefits of digital and we need our politicians, business leaders and community leaders to start championing a positive digital future for the UK.  Not as easy as it seems in a country that prides itself on its cynicism and conservatism (small c).  Ask yourself this question - when was the last time you read a positive story about digital technology in the press or saw one on the TV?  Thought so.  Then ask yourself how many digital scare stories you’ve heard or read recently (twitter trolls, wikileaks, internet child abuse sites, etc).  No comparison is there?  Do you see Digital as something vital or slightly scary?  And yet when any sane, rational person sits down to consider the benefits that have accrued to society as a result of the implementation of new digital capabilities across all aspects of our lives the argument is overwhelmingly in favour of digital.

So come on UK plc – let’s put aside our “Little Britain” tendencies, ignore the doom laden messages of the Daily Mail for 10 minutes and embrace, champion and invest in digital technology and infrastructure in the full knowledge that if we don’t we will be ensuring our economy takes a further step backwards.   Let’s overcome our digiphobia and whilst we are at it our homophobia and misogyny and bring into the boardroom a new generation of digital leaders who can help us play on the digital world stage. Rant over.

*Capgemini/MIT’s initial Digital Transformation research –

http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations

** Telegraph article on Digital Leadership –

http://www.telegraph.co.uk/technology/news/10199828/Britains-boardrooms-suffering-from-digital-deficit.html

***A non-fact is a fact that sounds interesting but in reality is deeply ambiguous or pointless, e.g. 78% of men in the UK do not regularly use a microwave oven.  An interesting fact on the surface but one that is ultimately worthless and in this case totally fabricated

****Capgemini/MIT’s research into the Digital Advantage –

 http://ebooks.capgemini-consulting.com/The-Digital-Advantage/index.html

Business Improvement vs Business Transformation - what really is the difference?

New technologies are constantly spawning opportunities for businesses to change the way in which they operate.   Many consultancies and software vendors will talk happily to their clients of the transformational nature of these technologies and wax lyrical about the opportunity to fundamentally reengineer the business.  However, having been involved in leading “big change” programmes over the last 20+ years I am all too aware of the fact that the “T” word is one of the most overused there is in the change business.   So, having been asked recently to ponder the difference between straight forward business improvement and transformational business change I thought I’d drop down a few thoughts to help dowse the hyperbole and look afresh at what it means to transform a business.

So here is my reading of the subject, which to be fair, is a bit of a mash-up of the work of some pretty serious philosophers, anthropologists and sociologists who spent a lot of time thinking about the way the world changes and my own experiential observations.   In this context, perhaps one of the most useful and insightful views on the difference between business improvement and transformation was shared with me recently by the venerable Bill Cook – CEO of Capgemini Consulting UK.  Bill looked at the challenge through the lens of technology maturity.

“In the development cycle of any new wave of technology (from the dawn of computing through the development of mainframes, the proliferation of desk top technology, the development of business process specific technology and onto the digital and cloud based services) there are always two specific phases.   The first phase is where the technology is new and businesses can choose from a multitude of providers to help “improve” their business capabilities.  The key challenge in this phase is the choice of the right vendor to fit with the current business processes or structures.  The second phase is where the new technology has matured and the market has consolidated (think business process technology consolidating onto SAP or Oracle platforms).  During this phase the impact of implementing the new technology is so large that rather than fit the technology to your business you are impelled to fit your business to the technology.  The key challenge in this phase is how do I change my business to maximise the benefits from this new technology.  This is transformation.”

This is certainly a pretty good and pragmatic way of looking at the difference and works well.  Another way of looking at the challenge that I quite like is to look at the “scope” of the change.  If the “change” is fundamentally altering the structures, processes and ways of working within your business then I think its a fairly safe bet to call it transformation – if the technology is merely enhancing one of the elements (structures, processes, ways of working) then that is business improvement.   It’s a simple and relatively loose view but not a bad way of looking at the difference.

For the purists, who really understand what Thomas Kuhn meant, by the now much misused concept of the paradigm shift, a Transformation is a much rarer thing that only occurs when an idea, concept or technology so changes our perception that holding onto the old ways of thinking and operating seems ridiculous – imagine the new options that emerged when we discovered the world wasn’t flat and that the Earth revolved around the Sun.  What is fascinating is that in Capgemini and MIT’s recent series of research into the concept of Digital Transformation the conclusion was that the advent of digital capabilities was of such a profound nature that it has the same transformational potential of the technologies of the industrial revolution.  http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations  

This is heady stuff but even a casual peak at the carnage being reeked on our high streets that is being directly attributed to the rise of digital capability suggests that we are once again seeing a wave of technology enabled change that we can truly call transformational.   We are living in exciting times.

So to conclude – if you are implementing a set of business wide, linked, digital technologies that are changing your businesses structure, process and ways of working it’s fair to say you are transforming your business.  If you are automating a single process it is pretty likely you are engaged in Improvement.  Everything in between is debatable.  Have fun debating it.

Thoughts on Innovation inspired by Glastonbury

This year I made it to Glastonbury where I had a remarkably good and mud free time.   The music was mostly fabulous and because my wife works in the music industry and has access to multiple backstage areas the loos were OK too.  For those that have yet to make it to this monument to passion (Michael Eavis’s), dedication (50,000 staff) and logistics (set in over 900 acres) let me just say that the scale of the Glastonbury Festival is mind blowing.  In essence a town the size of Watford (200,000+) emerges in a valley, parties solidly for 4 days and then vanishes to be replaced by cows.   At its peak this year more than 100,000 people gathered on the fields in front of the pyramid stage to watch the Rolling Stones do their thang.

But here’s the thing – despite Glastonbury and the myriad of other summer music festivals - the music industry is in big financial trouble having been completely reshaped by the advent of the new digital capabilities.  Digital has fundamentally changed the way we make, listen to and consume music.   Now I am making the assumption that this is not news to most of the people reading this blog and that going through the whys and wherefores of the music industry’s demise is not going to be necessary.   What I would like to do though is look at how the music industry has typically responded to the crisis and look at what other industries can learn from that response – and I want to do it by looking at the basic product – the artists and musicians.

Now the music industry has always been somewhat temporal and ephemeral – actually revelling in the concept of the “one hit wonder”, but, during the 60’s, 70’s and ‘80’s there at least seemed to be a passion about the product that has somehow got lost along the way.   Don’t get me wrong, there are still a number of very good artists and musicians out there writing, making and playing great music (Mumford & Sons, Lianne le Havas, Kodaline etc) but to my mind the progressive, world-bending heart and soul of the industry seems to have gone.  The rise and fall of the great new bands or music genres seems to have been replaced by a very commercial set of products that seem to be based around the selling of “nostalgia” (Rolling Stones, ‘80s Reforms etc) or to be completely “disposable” (X-Factor, The Voice, all dance music etc).  The prophetic words of the tremendous band, Half-man, Half-biscuit who wisely proclaimed – “Pop will eat itself” seem to have really come to pass.

Now before a riot breaks out and people start accusing me of a) being old, b) being an ‘80s throwback or c) not being a big fan of the Rolling Stones – all of which are true – what I’d like to state is that there is nothing wrong with a bit of nostalgia and a bit of disposability.   However, if it’s all that’s left on the shelves then it’s a pretty poor diet.

So, apologies for introducing some management speak into the blog but if I may reference the Boston Consulting Matrix* for a short while, I believe that what is driving this state of affairs is really quite simple – the only way the “traditional” distressed music industry has been able to conceive of making money this millennium has been to either milk their “cash cows” or to create sneaky disposable “cash cow mimics” (my term)– they look like cash cows but have not benefited from the level of investment needed to turn them from genuine “question marks” to real “stars”.   This leaves the product buying public with little choice between the music of the nostalgia pedlars and the would-be one hit wonder makers.  Unsurprisingly overall music sales and revenues continue to slide leaving the industry (not music) in a weaker and weaker state.

So what might other industries learn from this.  How should other industries respond when the new digital capabilities (mobile, data, cloud, social) start to transform their worlds?  What should they do when their cash flow is squeezed and the urge to milk or mimic the cash cow is strong?   Well, unsurprisingly I’m with Steve Jobs who managed to galvanise apple to invest in Innovation through a downturn and reap the rewards.  Of course our hard pressed industries should tighten their belts and reduce waste, but, please business leaders do not fail to invest in new product innovation and development.  Otherwise, the outcome for all of us is far too predictable.  Businesses will see the slow demise of their revenues and profits and we as customers will be subjected to a wearying array of nostalgic, repackaged products and an alternate set of instantly forgettable products of dubious quality.  Neither of these seems like a fabulous way to rediscover the much needed and illusory economic growth.

Failing to invest in product innovation and development is what the music industry has spectacularly failed to do over the last 20 years and we are all the poorer for it.  We mustn’t be afraid to invest in new trends, innovation and products, it really doesn’t have to be expensive (remember punk) just fresh and inspirational with a desire to change the world.   Now that would be rock’n’roll baby.

*http://en.wikipedia.org/wiki/BCG_growth-share_matrix

Work shadowing - A personal lens on Michael Gove's UK Education Reforms

Today, to equal fanfare and wailing, saw Michael Gove (UK Education Secretary) launch a series of educational reforms designed to better prepare the children of the UK for the workforce of the next decade.  This is of course a deeply contentious subject but one that is of real interest to me as both an employer and a parent of a teenager.   Interestingly, the challenges that Michael Gove is trying to wrestle with come into a wonderful and sharp focus in the arena of "workshadowing".  The very moment that many of the modern day pupils are given their first glimpse of the world of work.  

Below is a very personal view of what happens when the world of work and the world of school collide. 

Recently I proudly hosted my 14 year old son in the office.  He was “work shadowing” me.   For the uninitiated that means he accompanied me to work for a single day to watch and observe me as I make my way through a typical day at the office.  The theoretical idea is that he sees what the world of work is actually like and starts to form some views as to what he would like to do with his life.

What I was thinking beforehand was...

This’ll be a good day – it’ll give my boy a chance to meet some of the people I mention over the dinner table at home and give him a really good insight into what it’s like to actually go out to work.  I secretly hope that’ll he be a bit proud of me.

What he was thinking beforehand was...

This has a lot of potential for being a really dull day - I can’t believe I have to get up so early, I wonder what Dad eats for lunch and I can’t wait to go to Thorpe Park with the rest of the class tomorrow.

What actually happened was...

That I successfully illustrated to him that his Father’s working life does in fact consist of getting up early, commuting and then hopping from one meeting to the next until it’s home time.  He dutifully trailed me around, did his school “workshadow” report in the quiet moments between meetings, got suitably bored and fell asleep on the train home.

What he learnt was...

Commuting is tiring and Dad’s job is actually duller than I thought – now for Thorpe Park

What I learnt was...

That my son looks better in a suit than I do.  That the experience our children have at school is a million miles away from the way we work in the modern office environment.   That it’s really difficult to impress a 13 year old by typing at a PC whilst sitting at a desk,  that I need to do a bit more planning and preparation before he comes back to try and do “work experience” for a week at the grand old age of 15.

What all this tells us about education reform...

Clearly more can be done to better prepare our children for the world of work.  However, given that many of my adult friends spend really quite some time reminiscing about their school days and in particular their own "Thorpe Park" moments I would urge caution before we run headlong into creating a school experience that perfectly mirrors the workplace.  In hindsight, if we are looking for convergence, perhaps we should be looking to make the workplace experience more like the one many of us enjoyed at school - to be fair there are quite a few workplaces that I have visited that would undoubtedly benefit from having a day out at Thorpe Park too.

The Digital Workforce – The biggest HR challenge for the next 5 years

For those of us who are just a little older in the tooth than the fresh faced, tech savvy, Gen Y hordes that are currently joining the UK workforce it does not seem like very long ago that it was actually in the workplace, rather than the home that we could lay our hands on the cool gadgets and cutting edge tech.  As individuals we couldn’t afford the funky goods on our own salaries and were delighted and excited to go on the training courses that the workplace provided to validate us as experts on a particular device or software programme so we could proudly use the sexy tech in our workplace.   Fast forward what is probably only 10 years and the world has transformed.  Boom, within a decade it is now the average employees who have access to a vast array of very cool kit that is often not freely available in the workplace.  This omnipresent kit is now providing us, as consumers, with a very rich user experience that has transformed and raised our expectations of what tech can do for us and what we can do with tech.   

Unsurprisingly, as employees, we are keen to be able to not only match our “home” tech experience but surpass it in the “workplace” – our expectations are high.  So when these expectations are not met by an employer who is struggling to get a handle on how the new digital technologies have transformed the employee experience it sets up a cognitive dissonance that will not end well for those who are trying desperately to attract and retain the tech savvy Digirati* employees that are in particular demand today.

So, amidst the clamour from employees for smartphones, tablets and cool kit, what is the option for the large, traditional cash-strapped organisations that are saddled with legacy infrastructure and complex security requirements - particularly when pretty much all the spare investment cash is going on regulatory, compliance or digital marketing initiatives?

The business case for transforming the employee experience through digital technology has been a low priority.   In addition, whilst the marketing and finance departments have both eloquently made the case for “digitising” their capabilities – using social media, bespoke cloud solutions and cool big data and analytics solutions – the HRD and COO have been focused on the cost-cutting agenda foisted upon them by a stalled economy and have had to shelve the digital upgrade demands of a workforce that has been grateful to have a job. 

Given this background one option is of course to continue to ignore the employee expectations and requests and press on with further cost-cutting.  However, as the economy turns and the need for digitally literate staff continues to grow exponentially this “let them eat cake” approach is unlikely to be a smart move in anything other than the extreme short term.  Failure to address the digital challenge will simply make it increasingly difficult to attract and retain the required talent who would much rather work for an employer who “gets” digital and can provide an engaging digital employee experience.  A second option is to do what a number of businesses have done to date – i.e. experiment with a relatively disconnected set of potential digital solutions aimed at improving employee productivity – often relating to “employee collaboration tools” e.g. Yammer and sharepoint.  Whilst this “Fashionista*” behaviour seems on the face of it to be a worthwhile move and a step in the right direction, anecdotal evidence suggests that initiatives viewed as piecemeal by the workforce can actually create a negative response from employees who are frustrated at the low level dabbling and the perceived poorer quality interfaces that a number of the “corporate” digital solutions have traditionally provided.  In essence it drives the same outcome in terms of retention and attraction as the first option.  The third option is to realise that it is no longer tenable to ignore the employee experience and begin the serious work required to design a digitally transformed employee experience, capable of attracting, managing and retaining the right talent, enabling low-cost, high productivity working, enabling employee flexibility and mobility and delivering a new level of employee engagement.

It is the organisation that is prepared to rethink how it constructs and delivers a digital employee experience that will win the battle for the hearts, minds and talents of the digital employees.  To do this an organisation must tackle the challenge as a true transformation project and deliver the kind of employee experience currently being created by the Digirati for their workforces. 

Apologies for the advert but it is worth noting that at Capgemini we are currently working with a number of progressive organisations who are boldly redesigning the employee experience in an attempt to define and deliver a “Connected Organisation**”.   What is fascinating is that whilst the focus has been primarily on creating better employee engagement through digital transformation, as the businesses explore the implications of a connected organisation they are also opening up numerous real opportunities to drive cost saving and improve productivity.  If you want to know more do get in touch.

*Digirati & Fashionista are terms defined in the Capgemini/MIT research into Digital Transformation – for details follow the link - http://www.capgemini-consulting.com/digital-transformation-a-road-map-for-billion-dollar-organizations

**Connected Organisation is a term used by Capgemini to describe the modus operandi of the digitally enabled workforce of the Digirati

The Professionalisation of Innovation - Jumpers for Goalposts or the Chamions League

OK so this is the last in my recent mini-series of blogs about why organisations are struggling with Innovation.  So far I’ve debunked the idea that innovation is a solo pursuit and knocked on the head the idea that Innovation will magically occur in your organisation courtesy of Harry Potter.  In this blog I’m hoping to debunk the myth that consistent and high quality Innovation can be effectively delivered by a well meaning and disparate bunch of unorganised and ill equipped amateurs.

So before I get too far in to the blog let me instantly acknowledge that history does sporadically regale us with tales of small bands of heroic amateurs who for a brief moment in time defied the odds and made something amazing happen (e.g. the Dunkirk Evacuation flotilla, Paul the Football World Cup Octopus and the winners of Britain’s Got Talent).  However, these are almost undoubtedly rare and often short lived moments of genius (and in Paul’s case actually completely random).

The strange thing is that when businesses start to “get to grips” with Innovation they invariably try to harness the amateur innovation abilities of their own workforce.  Can you imagine any other aspect of corporate life where a CXO would willingly hand over the responsibility of delivering a consistent outcome to a random self-selecting subset of his organisation.   Imagine if property management were left in the hands of Brian from accounts who happened to be quite keen on DIY and had a “feel” for soft furnishings, imagine if sales management was left in the hands of Polly, that terribly nice lady from the call centre, who did a tremendous job of selling tickets for last year’s Xmas charity raffle and what if we left finance in the very capable hands of Bob from Operations who has taken out 4 ISA’s with 4 different banks in the last two years and has a small portfolio of shares.

And yet... when it comes to Innovation the first action of many a hard pressed CXO is to send out a call to action for all the members of the business to get involved with delivering Innovation.   Are they mad?

I suspect the disconnect is again a mental one - everyone has the ability to be creative and understands roughly what having an idea is – much like most people understand the rudiments of football.  However, when it comes to football, I think most people would also acknowledge the tremendous gulf in class and outcome between me and my boys having a kick around in the local park using our jumpers for goalposts and the highly trained professionals competing in the Champion’s League.  To deliver effective, consistent, high quality Innovation requires a very professional approach.

In essence when the well meaning CXO asks for volunteers to get involved with Innovation they are not only entrusting one of the organisations most valuable processes to a band of happy amateurs they are almost guaranteeing that despite a temporary buzz of well being arising from the inclusive language used that they will inevitably be left with the poor quality disappointing results that untrained amateurs are likely to deliver when competing against the professional Innovation capabilities of competitors.

So please, please if you are a CXO tasked with driving Innovation in your business please resist the temptation to muddle through with some keen beans.   Take the responsibility very seriously and look to find the professionals with the capabilities required to ensure that the Innovation delivered is worthy of the name.

Having laid out my thoughts on this topic I’d be fascinated to know what people think – do drop me a line and let me know.

The management regrets to inform you that sadly Harry Potter is not available to deliver Innovation

If Harry Potter was the charismatic CEO of one of today’s leading businesses then Innovation would occur at the flick of a wrist and with the wave of a wand.   There would be no need to put in place an Innovation System (Governance, Process, Resource & Technology) – no such banalities required for Harry and gang – instead all that would be required to deliver Innovation would be for Harry or one of his small band of heroic companions to come up with a great idea and then magic it into reality.

Unfortunately, despite often being very capable and charismatic leaders, most CXO’s are not magicians, do not carry magic wands and are unable to bring Innovations to life at the flick of a wrist and Harry Potter just isn't available due to prior commitments.  Despite this fact it is still a matter of bafflement to me that the vast majority of leading businesses in the UK have no clearly defined, universal Innovation System in place.  Instead most leading businesses are “hoping” that Innovation will spontaneously occur or that their CEO or Exec Board will imagine a brilliant new concept/improvement/product and magic it into reality.

Here is a simple question – does your business want to make a profit?  If yes a supplementary question is this – does your business have in place a universal financial management system (Governance, Processes, Resources and Technology) that is essential for helping you to consistently deliver a profit?  I’m guessing that the answer is a qualified yes – and whilst the system may not be perfect and may be in need of improvement and overhaul you at least have one.

Here’s another simple question – does your business want to generate growth, improve efficiency and develop new products through Innovation?  If yes here’s a further supplementary question – does your business have in place a universal Innovation system that will consistently deliver you the required Innovation?  I’m guessing (for guessing read talking from experience) that for most CXOs the answer is a qualified no.  Unsurprisingly then most businesses have patchy, unpredictable, sub-scale and slow innovation capabilities.

INNOVATION IS NOT MAGIC – it only happens when you put in place the elements required to make it happen.

So why do businesses seem to have a blind spot when it comes to making the necessary investments to ensure they have a reliable and consistent quality and quantity of Innovations in their business.  Well the excuses are multiple and easily argued against but the most prevalent are the following:

1)      Investment in Innovation is really like gambling our profits – it’s too risky

2)      Innovation comes from employing a maverick genius (Harry Potter type) to do it for us

3)      We are already doing Innovation – we have staff suggestion boxes in all our buildings

These are of course nonsense.  So come on CXOs – get a grip and put down your pretend magic wands.  Innovation is not magic or rocket science.   It is now relatively simple to put in place an Innovation System that will deliver consistent, high quality innovations.   For details of how to do it do get in touch or at least read my previous blogs – the clues are all there.